Mortgage Fraud

Report Mortgage FraudVia New E-mail Address and Phone Line

04/20/09

The Oregon office of the FBI and the U.S. Attorney’s Office today announced plans to ramp up efforts to identify and prosecute mortgage fraud. As part of this multi-agency effort, a dedicated e-mail address and telephone tip line have been established to enable the public to report mortgage fraud.

A special Federal Mortgage Working Group in Oregon operating since 2007 continues to tackle the mortgage fraud issue on multiple fronts. Most FBI investigators assigned to mortgage fraud are working major cases involving multiple suspects, multiple borrowers, and millions of dollars worth of fraudulent loans. Many of these cases involve the falsification of income, liabilities, or employment on applications and/or falsification of appraisals. The task force is also focusing on emerging trends, as analysts predict an even higher number of foreclosures in the future.

Emerging Trends

Foreclosure Rescue Schemes

One of the biggest concerns for consumers now comes in the form of unscrupulous “foreclosure specialists.” In some cases, desperate homeowners sign over the deed to their home to these “specialists” believing that they can stay in the home, make “rent” payments, and eventually re-purchase the property. In many cases, the “rent” payments that are supposed to go to the mortgage company never get sent. The “specialist” simply pockets the payments and any extra fees. The home continues into foreclosure, and the homeowner loses even more money.

Short Sales

A second area of concern involves “short sales.” In this instance, a buyer purchases a home with no intention of making payments. Oftentimes, additional funds are included in the loan for “improvements.” The buyer pockets that money and informs the bank several months later that the house will foreclose. The buyer presents a possible pre-foreclosure buyer. This second fraudster makes a deal with the lender to purchase the home below the current loan amount. The lender agrees, not knowing that the mortgage payments were deliberately not made to fabricate this short-sale situation. Sometimes, the new buyer or previous homeowner will damage the house to prove its lower worth. After the deal closes, the fraudster repairs the damage, gets the home appraised at a higher level, and re-sells it for a profit.

Trouble Signs and Safety Tips

When dealing with any kind of possible mortgage fraud, consumers should watch for some basic trouble signs and consider these safety tips:

Never agree to act as a “straw buyer” for anyone. A straw buyer is someone who allows property to be bought in his name when he has no intention of ever living in the home. Sometimes, the straw buyer believes the fraudster is allowing him in on an investment deal and/or that the fraudster intends to make the mortgage payments (but the money is never paid). Sometimes, the straw buyer is on in the scam from the beginning. In this case, the straw buyer knows the intent is to defraud the lender and let the house immediately go into foreclosure.

Never sign paperwork that is blank or that you don’t understand.

Never give in to pressure to sign paperwork or make a decision immediately.

Do not allow anyone to falsify your income, liabilities, or employment on an application.

Seek legal assistance from a reputable attorney or from law enforcement if you question a deal. Non-disclosure agreements that don’t allow such contacts are fraudulent and intended to frighten you away from seeking legitimate help.

If you are facing foreclosure, you should not have to pay a high fee for help from a counselor. A reputable counselor will be available at a low cost or no cost. You can find a list of foreclosure specialists approved by the U.S. Department of Housing and Urban Development at www.hud.gov.

Check your credit report frequently to ensure that no one is using your name or social security number to purchase property without your knowledge. You have a legal right to receive a free report from each of the three major credit reporting agencies each year at https://www.annualcreditreport.com/index.action.